<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q


(Mark One)

(x)      Quarterly report pursuant to Section 13 or 15(9) of the Securities
         Exchange Act of 1934

         For the quarterly period ended September 30, 1999
                                        ------------------

( )      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the quarterly period from         to
                                                            -------    -------

                       Commission file number 000-19579

                           INTERACTIVE NETWORK, INC.
            (Exact name of registrant as specified in its charter)


        California                       94-3025019
        (State of incorporation)         (I.R.S. employer identification number)

                             1161 Old County Road
                           Belmont, California 94002
             (Address of principal executive offices and zip code)

                                (650) 508-8793
             (Registrant's telephone number, including area code)


                       with a copy to Robert S. Townsend
                           Morrison & Foerster, LLP
                               425 Market Street
                            San Francisco, CA 94105
                                (415) 268-7000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes       No  x
    ---      ---

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes  x    No
    ---      ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class                             Shares outstanding as of November 10, 1999
-----                             ------------------------------------------
Common Stock                                      38,855,030
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                           INTERACTIVE NETWORK, INC.

                                     INDEX


<TABLE>
<CAPTION>
PART I.           FINANCIAL INFORMATION                                                              Page
                                                                                                     ----
<S>      <C>               <C>                                                                       <C>
         ITEM 1.           FINANCIAL STATEMENTS.....................................................   1

                           CONSOLIDATED BALANCE SHEET AS OF
                             DECEMBER 31, 1998 AND SEPTEMBER 30, 1999 (Unaudited)...................   1

                           CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND
                             THE NINE MONTHS ENDED SEPTEMBER 30, 1999...............................   2

                           STATEMENT OF CONSOLIDATED CASH FLOWS (Unaudited)
                             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999...........................   3

                           NOTES TO FINANCIAL STATEMENTS............................................   4

         ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                             FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........................   4

         ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES
                             ABOUT MARKET RISK......................................................   6

PART II. OTHER INFORMATION

         ITEM 1.           LEGAL PROCEEDINGS........................................................   7

         ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS................................   7

         ITEM 6.           EXHIBITS.................................................................   7

         SIGNATURES        .........................................................................   8
</TABLE>

                                       i
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                             Financial Statements

INTERACTIVE NETWORK, INC.
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                   As of                    As of
                                                             December 31, 1998        September 30, 1999
                                                                                         (Unaudited)
<S>                                                          <C>                      <C>
Assets
     Current assets:
         Cash and cash equivalents                            $     300,601            $   1,519,029
         Restricted cash                                                ---                6,136,664
         Prepaid expenses                                            78,256                   79,817
                                                             -----------------        ------------------
            Total current assets                                    378,857                7,735,510
                Total assets                                  $     378,857            $   7,735,510
                                                             =================        ==================

Liabilities and shareholders' equity
     Current liabilities:
         Accounts payable                                     $         ---            $     351,068
         Other accrued liabilities                                  214,821                    8,600
                                                             -----------------        ------------------
            Total current liabilities                               214,821                  359,668

     Liabilities subject to compromise                           46,296,316                4,973,750
     Long term liabilities                                              ---                  966,867

     Shareholders' equity (deficiency):
         Common stock                                           103,281,755              142,374,810
         Retained earnings (deficit)                           (149,414,035)            (140,939,585)
                                                             -----------------        ------------------
            Total shareholders' equity (deficiency)             (46,132,280)               1,435,225

                                                             -----------------        ------------------
                Total liabilities and shareholders' equity    $     378,857            $   7,735,510
                                                             =================        ==================
</TABLE>

                                       1
<PAGE>

INTERACTIVE NETWORK, INC.

CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
                                                                      Three months ended     Nine months ended
                                                                      September 30, 1999     September 30, 1999
                                                                         (Unaudited)            (Unaudited)
<S>                                                                   <C>                    <C>
Revenues:                                                                  $      ---            $       ---
General and administrative expenses:
     Salaries and wages                                                        73,531                159,478
     Contract labor                                                            20,948                 58,482
     Professional services                                                     54,383                100,700
     Legal Fees                                                                64,861                128,484
     Travel                                                                    20,877                 20,877
     Rent                                                                       4,066                  7,366
     Other administrative costs                                                17,747                 60,512
     Unusual items:
         Audit fees -- 1995-1998                                                  ---                180,000
         Legal -- NTN litigation                                                8,113                 15,733
         Legal -- Litigation with Shareholder                                  19,725                 19,725
         Shareholder relations - proxy and annual meeting                         ---                 51,259
         Payroll taxes, penalty and interest - Q3'95                              ---                 12,157
                                                                      ------------------     ------------------
            Total general and administrative expenses                         284,251                814,773

Reorganization items:
     Professional fees                                                        107,207                862,853
     U.S. Trustee Quarterly Fees                                                1,750                  2,750
                                                                      ------------------     ------------------
         Total reorganization items                                           108,957                865,603
Other income:
     Proceeds from litigation                                                     ---             10,375,380
     Other income (expense)                                                    38,519                 38,519
     Interest income (expense)                                                (99,411)              (258,272)
                                                                      ------------------     ------------------
Net profit before provision for income taxes                                 (454,100)             8,475,251
                                                                      ------------------     ------------------
     Federal and state income taxes                                               ---                    800
                                                                      ------------------     ------------------
Net profit                                                                 $ (454,100)           $ 8,474,451
                                                                      ==================     ==================
</TABLE>

                                       2
<PAGE>

                           INTERACTIVE NETWORK, INC.

                     Statement of Consolidated Cash Flows

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                       Nine months
                                                                                          ended
                                                                                   September 30, 1999
<S>                                                                                <C>
Cash flows from operating activities:
     Net Income (loss)                                                                $  8,474,451
     Adjustments to reconcile net loss to net cash provided by (used for)
         operating activities:
            Reorganization expenses                                                      1,074,074
            Changes in assets and liabilities:
                Prepaid expenses                                                            (1,562)
                Accounts payable                                                           248,861
                Taxes payable                                                                  ---
                Liabilities subject to compromise                                      (41,322,566)
                Other accrued liabilities                                                 (211,221)
                                                                                   ------------------
                    Cash provided by (used for) operating activities:                  (31,737,963)
                                                                                   ------------------

Cash flows from financing activities:
     Sale of common stock                                                                    2,106
     Exercise of stock options                                                              18,000
     Proceeds from settlement agreement                                                 39,072,949
                                                                                   ------------------
                    Cash provided by financing activities:                              39,093,055
                                                                                   ------------------

Net increase in cash                                                                  $  7,355,092
                                                                                   ==================

Cash:
     Beginning of period                                                              $    300,601
     End of period                                                                    $  7,655,692
</TABLE>

                                       3
<PAGE>

                            INTERACTIVE NETWORK, INC.

              Notes to Unaudited Consolidated Financial Statements

                               September 30, 1999



The unaudited consolidated financial information of Interactive Network, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. This financial
information reflects all adjustments, consisting only of normal recurring
adjustments, which in the opinion of management, are necessary for a fair
presentation. Operating results for the three and nine months ended September
30, 1999 are not necessarily indicative of the results that may be expected for
any subsequent quarter or for the year ended December 31, 1999. For further
information, reference is made to the consolidated financial statements and
footnotes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 1998.

Restricted Cash consists of cash and cash equivalent investments set aside by
the Company as a reserve to pay those claims of creditors which it is disputing
under its plan of reorganization (discussed in "Legal Proceedings" below).
Pursuant to the Chapter 11 Plan of Debtor and Debtor in Possession of
Interactive Network, Inc., as modified by the Bankruptcy Court's confirmation
order (the "Plan"), the Company is required to initially set aside 75% of the
amount of any claim it wishes to dispute. These funds must remain segregated
until the amount of restricted cash equals 100% of all remaining disputed
amounts or all disputed claims have been resolved.

Long Term liabilities consist of professional fees and expenses incurred in
connection with the Company's Chapter 11 bankruptcy proceedings. Payment of
these fees has been deferred by agreement until April 22, 2000, when payment is
due in full without interest.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Conditions and Results of Operations
contained in the Company's Annual Report for the year ended December 31, 1998.
The discussion of the Company's current business and future expectations under
this item contain forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed in the
subsection entitled "Forward Looking Statements" below.

Overview

Interactive Network is a company that was originally founded to provide
interactive television services, which it began providing in 1991. The Company
incurred significant expenses in developing, testing and marketing its services,
and was forced to curtail its operations by August, 1995, due to lack of ongoing
financing. While in operation, the Company acquired key strategic investors such
as TCI Cable (now a part of AT&T ), NBC, Gannet, Motorola, Sprint, and AC
Nielson.

Today, the Company owns certain intellectual property assets related to the
interactive television market and related to other interactive technology. Our
prior strategic investors remain as shareholders and current management is
confident in its strategy to deliver shareholder value by marketing our
intellectual property and by working toward enhancing and developing of our
patent portfolio. We plan to concentrate on exploiting our patent portfolio in a
cost effective way through licenses, joint ventures, strategic alliances, or
other methods that will not involve large overhead demands.

To provide the technical and management expertise to assist in the fulfillment
of our goals, we established an Advisory Panel of consultants, and have
re-employed Interactive's former Chief Scientist, Dr. Robert Brown. Management
is presently in discussion with additional prospective members who possess
technical expertise we feel
                                       4
<PAGE>

would be of benefit to the Company. Further, management is planning to
hire additional personnel to meet our anticipated future needs.

We also continue to expend significant resources in finishing our bankruptcy
reorganization, as well as in the enforcement of our intellectual property
rights.

We believe Interactive Network is once again positioned to participate in an
exciting explosion of information technology which brings with it a resurgence
of interactive technology. Management believes that our intellectual property
assets put our company in a position to be a part of the interactive content and
interactive services businesses currently being created. Management also
believes that there is and will continue to be a large market in interactive
applications in the fields of entertainment, advertising, games, and gambling
through Internet and television delivery.

Other Contingencies and Commitments:

There have been no changes in the discussion of "Other Contingencies and
Commitments" since the Company's discussion of that subject in its Quarterly
Report for the quarter ended March 31, 1999.

Liquidity and Capital Resources

The Company has paid all undisputed claims under its recently consummated plan
of reorganization and continues to dispute certain of the claims made by
creditors in its bankruptcy proceedings. The Company has reserved $6,136,664 for
disputed claims and deferred payments in accordance with its reorganization plan
(a copy of which was filed with the SEC on April 15, 1999 by the Company on Form
8-K). The Company has also granted a lien on any income derived from its
intellectual property assets until the reserve account balance equals 100% of
the contested amount. The amount of funds available to the Company after
resolution of contested claims will depend on the extent to which the Company is
successful in substantially reducing, defeating or deferring payment of the
claims the Company is contesting described in "Other Contingencies and
Commitments--Claims in Chapter 11 Proceedings Which the Company is Contesting"
in the Company's Annual Report for the year ended December 31, 1998. In the
event the Company is not successful in defeating, substantially reducing or
deferring payment of these claims, the Company's working capital requirements
would need to be satisfied in part by external sources of financing to the
extent revenues from exploitation of its patent portfolio are not sufficient.

Financing Activities. During the nine months ended September 30, 1999, the
Company received $18,000 upon the exercise of employee stock options and $2,106
from a director pursuant to Section 16(b) of the Exchange Act.

At September 30, 1999, the Company's principal source of liquidity consisted of
cash and cash equivalents totaling $7,655,693 . Our unrestricted working capital
at September 30, 1999 was $1,519,029.

The Company's current business plan continues to be one of exploiting its patent
portfolio through licenses, joint ventures or other methods that will not
involve large overhead or capital demands on the Company. The Company currently
expects its need for working capital for the period from consummation of the
Settlement Agreement through the end of 1999 to consist largely of general and
administrative and patent development and marketing expenses of approximately
$600,000, expected to be incurred in generating revenues from its Intellectual
Property assets, and professional fees of approximately $180,000. The Company
anticipates a total operating budget of approximately $1 million for this
period.

The Company continues to negotiate with professional firms to provide patent
research and development assistance, which may be a substantial use of its
liquid assets if an agreement is consummated. The Company continues its
litigation against NTN Communications, Inc. in Canada for that company's alleged
infringement of the Company's patents. The Company currently expects to incur
aggregate additional expenses in excess of $100,000 in connection with the
pursuit of this claim.

                                       5
<PAGE>

Results of Operations

Revenues.  During the nine months ended September 30, 1999, the Company realized
no revenues.

Costs of Revenues.  The Company incurred no costs of revenues in the nine months
ended September 30, 1999.

Research and Development.  The Company incurred no research and development
expenses in the nine months ended September 30, 1999.

Selling and Marketing.  The Company incurred no selling and marketing expenses
in the nine months ended September 30, 1999.

General and Administrative. The Company incurred general and administrative
expenses of $814,773 in the nine months ended September 30, 1999. Of these,
$180,000 related to professional fees for accounting and audit services, which
reflects a negotiated reduction of $50,000 in the Company's audit fees, expenses
of $51,259 related to its proxy solicitation and annual meeting, $12,157 in
payroll taxes, penalties and interest related to 1995 payroll expenses, legal
expense of $15,733 related to the Company's litigation with NTN Communications,
Inc. and legal expense of $19,725 related to the Company's litigation with one
of its shareholders.

Interest Income (Expense). The Company realized $89,728 of interest income and
accrued approximately $348,000 of interest expense during the nine months ended
September 30, 1999 related to the liabilities subject to compromise.

Net Income. During the nine months ended September 30, 1999, the Company had a
net income of $8,478,951. This income resulted primarily from payments received
in connection with consummation of the Settlement Agreement and subsequent
interest earned thereon.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk. It is our policy not to enter into derivative financial
instruments. Due to this, we did not have significant overall interest rate risk
exposure at September 30, 1999.

Foreign Currency Rate Risk.  We have no transactions in currencies other than
U.S. Dollars. We do not currently have any significant foreign currency exposure
and do not expect to incur significant currency-related gains and losses in
1999. We did not engage in foreign currency hedging activities during the nine
months ended September 30, 1999.


Forward Looking Statements.

The Management's Discussion and Analysis of Financial Condition and Results of
Operations sections of this quarterly report contain forward-looking statements
that are based on current expectations, estimates, forecasts and projections
about the Company's future prospects, plans and strategies, management's beliefs
and assumptions made by management. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," variations on such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions which are difficult to
predict. Therefore, actual results may differ significantly from the results
described in these forward-looking statements, including changes that could
affect the value of the Company's intellectual property assets and decisions by
the bankruptcy court in which the Company's Chapter 11 proceeding is pending
with respect to allowance of contested claims which may cause a resulting
increase in post-petition interest on claims and could reduce the Company's
anticipated working capital. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.

                                       6
<PAGE>

                                   PART II.
                               OTHER INFORMATION



ITEM 1.           LEGAL PROCEEDINGS

         The Registrant continues to pursue its earlier claims for patent
         infringement against NTN Communications, Inc. in Canada and intends to
         litigate these claims to full resolution, and continues to dispute
         certain claims in its bankruptcy proceeding.

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

         (c) Recent Sales of Unregistered Securities

         On August 3, 1999 the Registrant issued Mr. John Bohrer 50,000 shares
         of its common stock upon his exercise of his stock option for those
         shares. The Registrant received $4,500 as the exercise price for this
         purchase, and the issuance was made pursuant to Section 4(2) of the
         Securities Act.

ITEM 6.           EXHIBITS

         (a)               Exhibits

         Exhibit 27.1      Financial Data Schedule.
                           -----------------------

                                       7
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

Date:  November 15, 1999

                                    INTERACTIVE NETWORK, INC.
                                    (Registrant)

                                    By: /s/ Bruce Bauer
                                        ------------------------------
                                        Bruce W. Bauer
                                        Chairman of the Board
                                        President and Chief Executive Officer

                                       8